August 25th, 2013
10:55 AM ET
9 years ago

N.Y. attorney general suing Trump's school for fraud

(CNN) – New York's attorney general accused Donald Trump in a lawsuit Saturday of defrauding students who studied at the billionaire mogul's investment institute, though Trump's representative said a large majority of the school's alumni were satisfied with their experience.

The $40 million civil suit alleges Trump made false claims about the school, including that he was personally involved in selecting instructors and creating the curriculum.

Eric Schneiderman, the New York attorney general, said Trump had crafted a "bait and switch" with his school, using his well-known name.

"Trading on his celebrity status, Mr. Trump personally appeared in advertisements making false promises to convince people to spend tens of thousands of dollars they couldn't afford for lessons they never got," he wrote in a statement. "No one, no matter how rich or famous they are, has a right to scam hard working New Yorkers. Anyone who does should expect to be held accountable."

The suit names both Trump, the chairman of the school, and Michael Sexton, its former president, as defendants. Schneiderman is seeking $40 million to repay customers who have enrolled in the school, as well as additional penalties and fines.

On Twitter, Trump called Schneiderman a "lightweight" and said the attorney general was "trying to extort me with a civil law suit."

He also linked to a website that claims 98% of Trump University's former students were satisfied with their experience.

Michael Cohen, executive vice president of the Trump Organization and a lawyer for the billionaire, said the suit "has no merit and is nothing more than a cheap publicity stunt to deflect from (Schneiderman's) weak job performance."

"I am shocked he didn't leak it to the Kris Kardashian show," Cohen continued. "Maybe his office should focus more of their attention and the use of our tax dollars on bringing to justice those responsible for the financial meltdown."

Cohen also pointed to the website citing an approval rating of 98% for the Trump investing classes, saying the figure was derived from questionnaires submitted by students upon completing the course of study. He said the website was created in anticipation of the lawsuit.

Trump University became the Trump Entrepreneur Initiative in 2010 after the New York State Education Department said the company could not use the term "university" without its consent. In 2011, the attorney general began investigating it, along with several other for-profit educational institutions.

Former students in California have also sued Trump's school, saying its advertising misled them into spending thousands of dollars on workshops and "mentorships." In a class-action suit filed in 2010, the former students say Trump University is "like an infomercial" that lures customers with the Trump name but fails to deliver on its promises of success in real estate.

The Trump school offered courses in real estate, asset management, entrepreneurship and wealth creation. The courses ranged in price from $1,495 for a three-day workshop to $34,995 for a "full education."

Unlike other for-profit schools, Trump's outfit relies heavily on the brand of its namesake.

Trump made his money by investing in New York real estate, casinos and golf courses around the world. But he is perhaps best known in popular culture for his long-running reality television show, "The Apprentice."

More recently, Trump made headlines for suggesting that President Barack Obama is not a U.S. citizen, part of Trump's public mulling of a presidential bid. He eventually declined to run for the White House.

CNNMoney's Ben Rooney contributed to this report.

Filed under: Donald Trump
soundoff (426 Responses)
  1. mdesan

    "Caveat emptor!" It's a shame that people are so gullible, especially when the Donald is involved. He'd toss his mother out in the street if he could rent her apartment for a nickel more....

    August 25, 2013 01:54 pm at 1:54 pm |
  2. Aaron

    Trumps net worth is 3-5 billions...comparing to Bill Gates and Waren Buffett, his mouth and ego are bigger than their combined net worth.

    August 25, 2013 01:54 pm at 1:54 pm |
  3. Rick McDaniel

    That's entirely political........and we all know it.

    August 25, 2013 01:55 pm at 1:55 pm |
  4. Gene

    Karma is a. Witch. What flies around flies around . Too bad this bozo(Mr. Comb-over) is technically broke. This is just the beginning of people who made evil accusation toward a good good person meet their karma tic maker.

    August 25, 2013 01:58 pm at 1:58 pm |
  5. George

    Michael Cohen, executive vice president of the Trump Organization and a lawyer for the billionaire, said "I am shocked he didn't leak it to the Kris Kardashian show,"
    I think Kris Kardashian should sue Cohen for defamation of character.
    This kind of comment is meant for tabloid audiences. No respectable attorney should make a comment like this.
    Trump is a clown and Cohen is making statements like a circus barker.
    On that note, anyone who signed up for a course with Trump's name on it should have realized it was crap.

    August 25, 2013 01:59 pm at 1:59 pm |
  6. noAd

    I'm no fan of DT, but you gotta wonder: who would be dumb enough to go to one of these courses or institutes? Trump has money because there's a sucker born every minute. And that has become the American way with his generation of so-called or self-annointed business "leaders."

    August 25, 2013 02:00 pm at 2:00 pm |
  7. Grahame Rhodes

    What makeup is he using? That is as phony as he is.

    August 25, 2013 02:08 pm at 2:08 pm |
  8. Sean

    I gotta admit, my friend bought a condo at Trump tower and the unit was smaller than advertised but legally nothing could be done because there's an allowable variance difference in size from plan to when its built...a loophole.

    August 25, 2013 02:09 pm at 2:09 pm |
  9. youngkim3000

    It is great to see his finally held accountable for his nefarious actions. He basically "stole" money from people because he misrepresented his "university". This is just like check fraud. He should do jail time. It was not anything to be called "a university". No BA, MBA, JD, PhD, nothing to be awarded. Just false promises.

    August 25, 2013 02:09 pm at 2:09 pm |
  10. bobrimac

    $40 million is like peanuts to Trump. Have him fork out more money and then some. Make him prove he's an American citizen, check to make sure he has never hired an illegal immigrant, and see if he has registered guns.

    August 25, 2013 02:10 pm at 2:10 pm |
  11. American Thinker

    Something tells me Trump biggest asset is only his Name not any cash or majority holdings in major Real Estate. How many other billionaires are out putting their names on water bottles and steaks. Yes, Donald Trump sells Steaks online! He also sells cheap neckties at Macys. I just don't get it. - I bet he has no more than $50 Million in cash at the Bank.

    August 25, 2013 02:10 pm at 2:10 pm |
  12. youngkim3000

    He is the "poorest" man I have ever seen or heard of...

    August 25, 2013 02:10 pm at 2:10 pm |
  13. bear

    So the Attorney General of New York is going to sue Trump University because people went there and when they came out owed money and could not get a job. Sounds like he could sue every college and university in the country. A lot of people got ripped off a lot more by our state universities than by Trump's.

    August 25, 2013 02:11 pm at 2:11 pm |
  14. donald

    trump will settle out of court.

    August 25, 2013 02:14 pm at 2:14 pm |
  15. Name

    I'm noy saying it was ethical for Trump to do that but the students did learn a valuable lesson in business. Never trust people and do rsearch before you commit to something new.

    August 25, 2013 02:16 pm at 2:16 pm |
  16. Hector Slagg

    Well, We will see,
    Have no knowledge of this lawsuit but Trump is the Millionaire here, the rest of you are tracking mud into the house. Clean your own shoes before you tell someone else how to act.

    August 25, 2013 02:18 pm at 2:18 pm |
  17. Nick

    Great maybe if the suit is successful we won't have to hear about Donald Trump ever again. I still think its funny that he considers himself a successful businessman. How many times has he filed for bankruptcy?

    August 25, 2013 02:19 pm at 2:19 pm |
  18. Mike

    I'm sure he's laughing at $40 million. He puts more than that in his change jar every day. He deserves it though, as many people as he has bullied and sued.

    August 25, 2013 02:20 pm at 2:20 pm |
  19. Byron Allen

    The Democrats just want to smear trump because they fear him. Just another political hit job which will evaporate when its political usefulness is finished.

    August 25, 2013 02:20 pm at 2:20 pm |
  20. GOP = Greed Over People

    Ok, thanks for the 35k, now, here is the 3 day iteninart:

    Day 1: Do you have a father that is a successful real estate mogul in New York, whose company you can work while in college and then inherit when he dies? We will cover wills and how to make sure dad leaves you the company.

    Day. 2: What, no dad to learn from and inherit. Fine here are some ruby red slippers for guests to try on now click the heels together 3 times...

    Day 3: Below is a list of students that passed the ruby red slipper test, now, would you like to attend the seminar on how to win beauty pageants?

    That will another 35,000 schmoalians you schmo, er, contestant!

    August 25, 2013 02:22 pm at 2:22 pm |
  21. TKO

    I'm sorry, but getting a degree is not primarily about getting a job, it's about getting an education.

    August 25, 2013 02:24 pm at 2:24 pm |
  22. Shanna Powell

    Fraud is fraud! I do not know the details of the claim but I do get very angry with elite american who thinks he or she is above the law. If Trump is guilty I hope he pays.. personally I do not think that fines and probation is fair.. white collar criminals should go to JAIL like the common thief who forges a check, knocks over a liquer store, or welfare fraud. I personally like Donald Trump and think he gets hated on for being a keen bussiness man.. but if he breaks the law or works a twist that is dishonest he needs to be exposed.

    August 25, 2013 02:24 pm at 2:24 pm |
  23. logic rules

    ...the article fails to reference the fact that Mr. Silver Spoon himself, despite being born on thir base, was mired in bankruptcy early in his career, and only by the grace of taxpayers and daddy, was he able to survive...what class curriculum does that fall under?

    August 25, 2013 02:24 pm at 2:24 pm |
  24. TKO

    Getting a degree is not primarily about employment, it's about getting an education.

    August 25, 2013 02:25 pm at 2:25 pm |
  25. Republicans are funny creatures

    Wait a for profit no accredited learning center accused of fraud?!?!? REALLY?

    This has been going on for decades....unless your credits transfer to a REAL college...don't waste your time with places like this

    August 25, 2013 02:25 pm at 2:25 pm |
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